Record net revenues of $1.6 billion, increased 16% compared with the year-ago period.

Net income of $130.9 million, or $1.72 per diluted common share, increased 15% compared with the year-ago period.

Stifel Financial Corp. (NYSE: SF) today reported net income of $39.9 million, or $0.52 per diluted common share on net revenues of $523.5 million for the three months ended September 30, 2014, compared with net income of $69.7 million, or $0.93 per diluted common share, on net revenues of $478.6 million for the third quarter of 2013. Included in net income for the three months ended September 30, 2013 is a tax benefit related to discontinuing the business operations of SN Canada and merger-related expenses. The after tax impact of these items was $0.47 per diluted common share.

For the three months ended September 30, 2014, the Company reported non-GAAP net income from continuing operations of $48.7 million, or $0.64 per diluted common share, compared with non-GAAP net income from continuing operations of $39.6 million, or $0.53 per diluted common share for the third quarter of 2013. These non-GAAP results exclude merger-related expenses associated with the Company's acquisitions. The after-tax impact is $0.12 per diluted common share.

For the nine months ended September 30, 2014, the Company reported net income of $130.9 million, or $1.72 per diluted common share on record net revenues of $1.6 billion, compared with net income of $113.7 million, or $1.56 per diluted common share, on net revenues of $1.4 billion for the comparable period in 2013.

For the nine months ended September 30, 2014, the Company reported non-GAAP net income from continuing operations of $152.0 million, or $2.00 per diluted common share, compared with non-GAAP net income from continuing operations of $124.8 million, or $1.71 per diluted common share for the comparable period in 2013. A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed below under "Non-GAAP Financial Measures."

Three Months Ended

Nine Months Ended

(in 000s)

9/30/14

9/30/13

% Change

6/30/14

% Change

9/30/14

9/30/13

% Change

Net revenues

$

523,455

$

478,639

9.4

$

560,147

(6.6

)

$

1,630,348

$

1,410,921

15.6

Net income from continuing operations

$

40,093

$

74,929

(46.5

)

$

45,577

(12.0

)

$

133,643

$

120,782

10.6

Net income

$

39,903

$

69,690

(42.7

)

$

43,601

(8.5

)

$

130,886

$

113,745

15.1

Non-GAAP net income from continuing operations1

$

48,698

$

39,649

22.8

$

51,266

(5.0

)

$

151,992

$

124,840

21.7

Earnings per basic common share:

Income from continuing operations

$

0.60

$

1.16

(48.3

)

$

0.69

(13.0

)

$

2.01

$

1.91

5.2

Loss from discontinued operations

--

(0.08

)

(100.0

)

(0.03

)

(100.0

)

(0.04

)

(0.11

)

(63.6

)

Earnings per basic common share

$

0.60

$

1.08

(44.4

)

$

0.66

(9.1

)

$

1.97

$

1.80

9.4

Earnings per diluted common share:

Income from continuing operations

$

0.52

$

1.00

(48.0

)

$

0.60

(13.3

)

$

1.76

$

1.66

6.0

Loss from discontinued operations

--

(0.07

)

(100.0

)

(0.02

)

(100.0

)

(0.04

)

(0.10

)

(60.0

)

Earnings per diluted common share

$

0.52

$

0.93

(44.1

)

$

0.58

(10.3

)

$

1.72

$

1.56

10.3

Non-GAAP net income from continuing operations1

$

0.64

$

0.53

20.8

$

0.68

(5.9

)

$

2.00

$

1.71

17.0

Weighted average number of common shares outstanding:

Basic

66,691

64,706

3.1

66,302

0.6

66,344

63,133

5.1

Diluted

76,681

75,191

2.0

75,641

1.4

76,011

72,851

4.3

1 A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."

Chairman's Comments

"In the third quarter, we had record results in Global Wealth Management and solid results in Investment Banking. Our equity and fixed income brokerage businesses were impacted in the quarter by lower volumes, particularly in the month of August. On the positive side, market volumes have strengthened in the month of October," stated Ronald J. Kruszewski, Chairman and CEO of Stifel.

"Our results reflect two months of our partnership with Oriel Securities, our U.K. investment bank. The initial integration is going well and we look forward to their future contributions. Looking ahead, we expect to close the acquisition of Legg Mason Investment Counsel in November, which will add $9 billion in client assets."

Brokerage Revenues

Brokerage revenues, defined as commissions plus principal transactions revenues were $261.0 million, a 3% decrease compared with the third quarter of 2013 and an 6% decrease compared with the second quarter of 2014.

Global wealth management brokerage revenues were $159.4 million, a 1% increase compared with the third quarter of 2013 and a 2% decrease compared with the second quarter of 2014.

Institutional equity brokerage revenues were $58.2 million, a 1% decrease compared with the third quarter of 2013 and a 6% decrease compared with the second quarter of 2014.

Institutional fixed income brokerage revenues were $43.4 million, a 16% decrease compared with the third quarter of 2013 and a 20% decrease compared with the second quarter of 2014.

Investment Banking Revenues

Investment banking revenues were $120.1 million, a 29% increase compared with the third quarter of 2013 and a 15% decrease compared with the second quarter of 2014.

Equity capital raising revenues were $44.1 million, a 14% increase compared with the third quarter of 2013 and a 28% decrease compared with the second quarter of 2014.

Fixed income capital raising revenues were $25.1 million, a 65% increase compared with the third quarter of 2013 and a 24% increase compared with the second quarter of 2014.

Advisory fee revenues were $50.9 million, a 31% increase compared with the third quarter of 2013 and an 16% decrease compared with the second quarter of 2014.

Asset Management and Service Fee Revenues

Asset management and service fee revenues were $96.6 million, a 26% increase compared with the third quarter of 2013 and a 3% increase compared with the second quarter of 2014. The increase is due to the higher value of fee-based accounts, as a result of market appreciation and new client assets.

Compensation and Benefits Expenses

For the quarter ended September 30, 2014, compensation and benefits expenses were $331.4 million, which included $7.2 million of merger-related expenses. This compares with $326.0 million in the third quarter of 2013, which includes merger-related expenses of $28.6 million, and $355.3 million in the second quarter of 2014, which includes merger-related expenses of $1.5 million.

Excluding merger-related expenses, compensation and benefits as a percentage of net revenues was 61.8% in the third quarter of 2014, compared with 62.0% in the third quarter of 2013 and 63.0% in the second quarter of 2014.

Transition pay, which primarily consists of amortization of retention awards, signing bonuses, and upfront notes, as a percentage of net revenues was 5.1% in the third quarter of 2014, compared with 4.6% in the third quarter of 2013 and 4.5% in the second quarter of 2014.

Non-Compensation Operating Expenses

For the quarter ended September 30, 2014, non-compensation operating expenses were $126.2 million, which included merger-related expenses of $3.7 million. This compares with $121.6 million in the third quarter of 2013, which includes merger-related expenses of $4.8 million, and $127.4 million in the second quarter of 2014, which includes merger-related expenses of $4.5 million.

Excluding merger-related expenses, non-compensation operating expenses as a percentage of net revenues for the quarter ended September 30, 2014 was 23.3%, compared with 24.4% in the third quarter of 2013 and 21.9% in the second quarter of 2014.

Provision for Income Taxes

The effective income tax rate for the quarter ended September 30, 2014 was 39.0%. The provision for income taxes for the quarter ended September 30, 2013 was impacted by the U.S. tax benefit of $58.2 million as a result of the Company's investment in SN Canada. The effective income tax rate was 41.2% in the second quarter of 2014.

Assets and Capital

Assets

Assets increased 7% to $9.3 billion as of September 30, 2014 from $8.7 billion as of September 30, 2013. The increase is primarily attributable to growth of Stifel Bank, the Company's bank subsidiary, which as of September 30, 2014 has grown its assets to $5.0 billion from $4.5 billion as of September 30, 2013.

At September 30, 2014, the Company's Level 3 assets of $177.8 million, or 2% of total assets, consisted of $101.8 million of auction rate securities and $76.0 million of partnership interests, private company investments, private equity, and fixed income securities. The Company's Level 3 assets as a percentage of total assets measured at fair value was 6% at September 30, 2014.

Non-performing assets as a percentage of total assets as of September 30, 2014 was 0.07%.

Capital

The Company's Tier 1 leverage capital ratio was 16.0% at September 30, 2014 and Tier 1 risk-based capital ratio was 27.9% at September 30, 2014.

At September 30, 2014, book value per common share was $33.92 based on 66.0 million common shares outstanding.

Stockholders' equity as of September 30, 2014 increased $244.1 million, or 12%, to $2.2 billion from $2.0 billion as of September 30, 2013.

Conference Call Information

Stifel Financial Corp. will host its third quarter 2014 financial results conference call on Thursday, November 6, 2014, at 5:00 p.m. Eastern time. The conference call may include forward-looking statements.

All interested parties are invited to listen to Stifel's Chairman and CEO, Ronald J. Kruszewski, by dialing (877) 876-9938 and referencing conference ID #28188942. A live audio webcast of the call, as well as a presentation highlighting the Company's results, will be available through the Company's web site, www.stifel.com. For those who cannot listen to the live broadcast, a replay of the broadcast will be available through the above-referenced web site beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel's broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated; Keefe Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC; and Century Securities Associates, Inc., and in the United Kingdom and Europe through Stifel Nicolaus Europe Limited; Keefe, Bruyette & Woods Limited; and Oriel Securities Limited. The Company's broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank & Trust offers a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. offers trust and related services. To learn more about Stifel, please visit the Company's web site at www.stifel.com.

Forward-Looking Statements

This earnings release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this earnings release not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this earnings release are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things, the following possibilities: the ability to successfully integrate acquired companies or the branch offices and financial advisors; a material adverse change in financial condition; the risk of borrower, depositor, and other customer attrition; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the companies' operations, pricing, and services; and other risk factors referred to from time to time in filings made by Stifel Financial Corp. with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. Stifel Financial Corp. disclaims any intent or obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Summary Results of Operations (Unaudited)

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts)

9/30/14

9/30/13

% Change

6/30/14

% Change

9/30/14

9/30/13

% Change

Revenues:

Commissions

$

151,621

$

145,837

4.0

$

152,712

(0.7

)

$

463,749

$

446,498

3.9

Principal transactions

109,378

122,583

(10.8

)

125,676

(13.0

)

361,515

341,153

6.0

Brokerage revenues

260,999

268,420

(2.8

)

278,388

(6.2

)

825,264

787,651

4.8

Investment banking

120,147

92,851

29.4

141,515

(15.1

)

393,966

289,199

36.2

Asset management and service fees

96,638

76,710

26.0

94,231

2.6

280,039

221,711

26.3

Other income

4,803

13,063

(63.2

)

8,742

(45.1

)

18,745

45,269

(58.6

)

Operating revenues

482,587

451,044

7.0

522,876

(7.7

)

1,518,014

1,343,830

13.0

Interest revenue

52,096

39,130

33.1

46,113

13.0

141,035

101,829

38.5

Total revenues

534,683

490,174

9.1

568,989

(6.0

)

1,659,049

1,445,659

14.8

Interest expense

11,228

11,535

(2.7

)

8,842

27.0

28,701

34,738

(17.4

)

Net revenues

523,455

478,639

9.4

560,147

(6.6

)

1,630,348

1,410,921

15.6

Non-interest expenses:

Compensation and benefits

331,440

326,020

1.7

355,267

(6.7

)

1,033,478

958,179

7.9

Occupancy and equipment rental

41,611

41,288

0.8

42,967

(3.2

)

125,110

116,090

7.8

Communications and office supplies

27,464

26,122

5.1

25,869

6.2

78,151

74,034

5.6

Commission and floor brokerage

9,971

10,150

(1.8

)

9,248

7.8

28,247

28,777

(1.8

)

Other operating expenses

47,203

44,051

7.2

49,273

(4.2

)

143,945

126,600

13.7

Total non-interest expenses

457,689

447,631

2.2

482,624

(5.2

)

1,408,931

1,303,680

8.1

Income from continuing operations before income taxes

65,766

31,008

112.1

77,523

(15.2

)

221,417

107,241

106.5

Provision for income taxes

25,673

(43,921

)

*

31,946

(19.6

)

87,774

(13,541

)

*

Net income from continuing operations

40,093

74,929

(46.5

)

45,577

(12.0

)

133,643

120,782

10.6

Discontinued operations:

Loss from discontinued operations, net of tax

(190

)

(5,239

)

(96.4

)

(1,976

)

(90.4

)

(2,757

)

(7,037

)

(60.8

)

Net income

$

39,903

$

69,690

(42.7

)

$

43,601

(8.5

)

$

130,886

$

113,745

15.1

Earnings per basic common share:

Income from continuing operations

$

0.60

$

1.16

(48.3

)

$

0.69

(13.0

)

$

2.01

$

1.91

5.2

Loss from discontinued operations

--

(0.08

)

(100.0

)

(0.03

)

(100.0

)

(0.04

)

(0.11

)

(63.6

)

Earnings per basic common share

$

0.60

$

1.08

(44.4

)

$

0.66

(9.1

)

$

1.97

$

1.80

9.4

Earnings per diluted common share:

Income from continuing operations

$

0.52

$

1.00

(48.0

)

$

0.60

(13.3

)

$

1.76

$

1.66

6.0

Loss from discontinued operations

--

(0.07

)

(100.0

)

(0.02

)

(100.0

)

(0.04

)

(0.10

)

(60.0

)

Earnings per diluted common share

$

0.52

$

0.93

(44.1

)

$

0.58

(10.3

)

$

1.72

$

1.56

10.3

Weighted average number of common shares outstanding:

Basic

66,691

64,706

3.1

66,302

0.6

66,344

63,133

5.1

Diluted

76,681

75,191

2.0

75,641

1.4

76,011

72,851

4.3

* Percentage not meaningful.

Statistical Information

(in thousands, except per share, employee and location amounts)

9/30/14

9/30/13

% Change

6/30/14

% Change

Statistical Information:

Book value per share

$

33.92

$

31.46

7.8

$

33.18

2.2

Financial advisors 2

2,096

2,075

1.0

2,085

0.5

Full-time associates

6,083

5,780

5.2

5,881

3.4

Locations

360

354

1.7

360

--

Total client assets

$

172,742,000

$

153,901,000

12.2

$

173,383,000

(0.4

)

Business Segment Results

Summary Segment Results (Unaudited)

Three Months Ended

Nine Months Ended

(in 000s)

9/30/14

9/30/13

% Change

6/30/14

% Change

9/30/14

9/30/13

% Change

Net revenues:

Global Wealth Management

$

317,241

$

274,669

15.5

$

307,247

3.3

$

921,671

$

824,344

11.8

Institutional Group

215,160

205,132

4.9

255,712

(15.9

)

720,849

593,875

21.4

Other

(8,946

)

(1,162

)

(669.9

)

(2,812

)

(218.1

)

(12,172

)

(7,298

)

(66.8

)

$

523,455

$

478,639

9.4

$

560,147

(6.6

)

$

1,630,348

$

1,410,921

15.6

Operating contribution: 3

Global Wealth Management

$

94,026

$

72,128

30.4

$

89,098

5.5

$

262,800

$

220,551

19.2

Institutional Group

29,500

34,986

(15.7

)

42,690

(30.9

)

117,812

94,298

24.9

Other

(45,495

)

(41,669

)

9.2

(46,858

)

(2.9

)

(133,079

)

(110,192

)

20.8

$

78,031

$

65,443

19.2

$

84,930

(8.1

)

$

247,553

$

204,657

21.0

As a percentage of net revenues:

Compensation and benefits

Global Wealth Management

55.9

58.2

55.9

56.8

58.3

Institutional Group

61.2

58.4

61.6

61.5

60.5

Non-comp. operating expenses

Global Wealth Management

14.5

15.5

15.1

14.7

14.9

Institutional Group

25.1

24.5

21.7

22.2

23.6

Income before income taxes

Global Wealth Management

29.6

26.3

29.0

28.5

26.8

Institutional Group

13.7

17.1

16.7

16.3

15.9

14.9

13.6

15.1

15.1

14.5

2 Includes 139, 145, and 140 independent contractors at September 30, 2014, September 30, 2013, and June 30, 2014, respectively.

3 A reconciliation of the Company's GAAP results to these non-GAAP measures is discussed under "Non-GAAP Financial Measures."

The Company utilized non-GAAP calculations of presented net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin, and basic and diluted earnings per share as additional measures to aid in understanding and analyzing the Company's financial results for the three and nine months ended September 30, 2014. Specifically, the Company believes that the non-GAAP measures provide useful information by excluding certain items that may not be indicative of the Company's core operating results and business outlook. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company's results in the current period to those in prior and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance. These non-GAAP amounts exclude certain compensation and non-compensation operating expenses associated with the Company's acquisitions.

A limitation of utilizing these non-GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expenses ratios, pre-tax margin, and basic and diluted earnings per share is that the GAAP accounting effects of these merger-related charges do in fact reflect the underlying financial results of the Company's business and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that GAAP measures of net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin, and basic and diluted earnings per share and the same respective non-GAAP measures of the Company's financial performance should be considered together.

The following table provides details with respect to reconciling net revenues, compensation and benefits, non-compensation operating expenses, income before income taxes, provision for income taxes, net income, compensation and non-compensation operating expense ratios, pre-tax margin, and basic and diluted earnings per share on a GAAP basis for the three and nine months ended September 30, 2014 to the aforementioned expenses on a non-GAAP basis for the same period.